Global natural gas prices fell across the board last week, weighed down by warmer weather in Europe and North America, along with continued measures to battle the coronavirus that have cut demand.
January Japan Korea Marker (JKM) futures slid to $6.375/MMBtu on Friday, finishing well below the $7.00 mark near where the contract has been trading in recent weeks. The Dutch Title Transfer Facility for January gave up even more, falling 50 cents from Nov. 16-20 to finish at $4.58.
In Asia, spot demand declined, while a surge in Covid-19 cases, particularly in Japan spooked the market. In Europe, warmer weather and coronavirus restrictions combined to drag down prices. In the United States, the December Henry Hub contract finished 8% lower than where it started the week despite feed gas deliveries to LNG export terminals holding strong near 10 Bcf/d. Warmer weather and higher production pushed U.S. prices lower.
Eighteen LNG vessels left the United States during the week ending Nov. 18 with a combined carrying capacity of 64 Bcf, flat from the prior week when 18 vessels left carrying 65 Bcf.
On Monday, however, global gas prices followed Brent crude upward, which has been on the rise over the last three weeks as momentum gains for a Covid-19 vaccine. AstraZeneca plc and the University of Oxford touted the effectiveness of their vaccine on Monday.
In Asia, an outage that began earlier this month has ended at the Bintulu LNG plant in Malaysia. Chevron Corp. also said that Train 2 at its Gorgon LNG plant off the northwest coast of Western Australia has restarted production. The train was taken offline for maintenance in May, but the company discovered weld quality issues on the propane heat exchangers in July.
“Insights gained from Train 2 repairs will contribute to more efficient inspections and potential repairs on Trains 1 and 3, with preparations underway for shutting down Train 1 for inspections,” Chevron said Monday. “The length of the shutdown will be determined by what is discovered during inspections. Following completion of inspections and potential repairs on Train 1, Train 3 will undergo a similar process.”
Furthering supply issues in the Pacific Basin, Qatargas Train 4 was reportedly shut last week for unexpected maintenance due to an issue on its compressor, according to Bloomberg. Qatargas operates 14 production trains with 77 million metric tons/year (mmty) of output.
In other developments, India’s Prime Minister Narendra Modi said over the weekend that the country is aiming to reduce its carbon footprint by 30-35% this decade. As part of those efforts, he said the country would increase its use of natural gas by four times. Natural gas currently accounts for roughly 6% of the country’s energy mix. But since India’s production capacity and infrastructure aren’t suited to meeting that goal, LNG imports are likely to increase significantly.
Strong spot buying from India is supporting Asian prices. Kpler said last week that Indian imports hit a record high of 2.7 million tons last month, pushing the country’s global market share in October to 12%.
Also last week in India, Minister of Petroleum and Natural Gas Dharmendra Prahan said the country would invest more than $1 billion over the next three years to install over 1,000 LNG fueling stations as part of efforts to reduce diesel consumption and lower emissions.
In Europe, British Prime Minister Boris Johnson announced a “green industrial revolution” last week, highlighting plans to invest $16 billion in renewable energy and nuclear power. Johnson also said the UK would aim to ban new sales of gasoline and diesel cars beginning in 2030.
Along the U.S. Gulf Coast, NextDecade Corp. said it has selected Great Lakes Dredge & Dock Corp. to improve the Brownsville Ship Channel for the Rio Grande LNG project on the South Texas coast. NextDecade said Great Lakes would deepen the channel to ensure access for large LNG carriers, among other things. NextDecade plans to make a final investment decision (FID) on the 27 mmty export terminal next year.
Reuters also reported last week that Venture Global LNG Inc. quietly delayed plans to sanction its 20 mmty Plaquemines LNG project in Plaquemines Parish, LA, until mid-2021. The change was made on the company’s website from a previously listed FID date of late 2020. Venture Global is already building the 10 mmty Calcasieu Pass LNG terminal in Cameron Parish, LA.
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